We use a proprietary dataset from a large Swiss
wholesale bank and examine the impact of fiancial
advice on individual investors' trading
performance and behavioral biases.
Due to the unique structure of our dataset, we can classify each trade as either an advised or an
independent trade.
This allows us to compare advised and independent
trades on a trade-by-trade within-person analysis. Thus, our study is not plagued by the typical selection and
endogeneity problem existing studies on the impact of financial advice typically face. We document that advisors hurt trading performance and that this effect is particularly pronounced if the trade follows a client-advisor contact that is initiated by the advisor.
There is also only limited evidence that advisors help to reduce behavioral biases, casting serious doubts on the role of financial
advisors.